The Wong Company produces and sells a product for which variable costs are $1.50 per unit. Annual fixed costs are $60,000, and annual capacity is 40,000 units. The company presently sells 30,000 units at $6 per unit. The company receives an order to produce and sell 10,000 units for which the buyer will pay $22,500.
a. What will be the company's net income if it does not accept the order?
b. What will its net income be if it decides to accept the order?